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Tax Issues Concerning Day Care Homes

EO Guidance Document #
FNS-GD-1982-0004
Resource type
Guidance Documents
Instructions
Resource Materials
DATE: October 14, 1982
POLICY MEMO: 796-5
SUBJECT: Tax Issues Concerning Day Care Homes
TO: Regional Directors
Special Nutrition Programs

Administering agencies have in the past expressed concern over two federal income tax issues connected with Child Care Food Program (CCFP) operations in day care homes: (1) tax status of program reimbursement to providers and (2) possible responsibility of home sponsors for Social Security and unemployment contributions for providers.

With respect to the first issue, providers should be made aware that cost records may be requested by IRS, even though they are not required for home providers by CCFP regulations.

Regarding the second issue, sponsor responsibility depends on whether providers under a given sponsoring organization are considered employees, or are deemed to be self-employed. Provider status can vary from sponsor to sponsor. Only IRS can establish policy and procedures relative to these issues.

State agencies should alert sponsoring organizations of homes to these issues and refer them to IRS for further guidance. Revenue ruling 79-142 states the most recent official IRS position on the CCFP. It might be of general assistance to home sponsoring organizations in dealing with the subject tax issues and could serve as an appropriate point of departure for discussions between them and local IRS officials. Administering agencies may therefore wish to distribute the ruling, made available to them in 1979, to home sponsors. An additional copy is attached as Exhibit A for your convenience.

Jordan Benderly
Director
Child Care and Summer Programs Division

10/14/1982

The contents of this guidance document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.